Module 7 Quiz

Lisa has a contract to buy Bill's house for $150,000. She made a $6,000 earnest money deposit, which was specified to be used as liquidated damages if necessary. Lisa does not show up at settlement. It takes Bill six months to find another buyer, who offers him only $134,000. How much can Bill sue Lisa for the compensatory damages?

$10,000. compensatory damages = the amount he lost ($16,000) minus the liquidated damages he should've already recovered ($6,000).

What is required for a valid contract.

1. acceptance, 2. consideration, 3. lawful and possible objective, 4. offer and capacity. ***NOT accord and satisfaction.

What is the maximum number of months for which an oral lease is generally considered valid in New York?

12 months.

A purchaser agrees to pay $600 a month for ten years to buy a property and agrees to pay all real estate taxes, insurance premiums, and regular maintenance costs. The seller will hold legal title to the property even though the purchaser will live in the property. This contract is best described as what?

A land contract. aka an "installment sales contract"

What is something of value given to induce another into a contract?

Consideration.

Darrel just signed a listing agreement with Lots-O-Wealth Realty Co. What type of contract is this?

Executroy. a contract in which the parties have not performed their obligations.

Which situation provides the least liability to an original tenant?

Novation. the act of creating a totally new lease, substituting the original party to the lease for someone else.

Top Cuts Lawn Service has an agreement to mow all of L0ts-O-Wealth Realty Co. properties for sale. Top Cuts is now concentrating their efforts on the east side of town, and so they have assigned the properties on the west side of town to another lawn service, Under Cuts. Who is liable under an assignment?

Top Cuts remains secondarily liable.

Francis wants to buy a house, but she's not sure where to begin. She enlists the help of an agent to help her find the right house and represent her through the purchase process. What type of contract applies to this situation?

a buyer agency agreement

A voluntary agreement between legally competent parties to perform or refrain from performing some legal act, supported by legal consideration, is referred to as

a contract.

What is a novation?

a new contract.

To form a valid contract there must be an offer and

acceptance.

Marvin contracted with Walsof Plastic Co. to install vinyl siding on his house. The contract stated that the company would install ACME Type A siding. However, due to shortages, Walsof Plastic Co. could not obtain that particular siding. Marvin agreed to be a substitution of the vinyl from another manufacturer. This in an example of

accord and satisfaction.

A contract is defined as bilateral under which of the following circumstances?

all parties to the contract are bound to act.

Daphne, a victim of identity theft, can't currently qualify for a loan but wants to buy her friend's condo for $90,000. She could give him $1,000 now, if he promised not to sell to anyone else in the next six months and give her the opportunity to purchase the property withing that time period. This is what?

an option agreement.

Judy signed a one-year percentage lease with Sam. He agreed to provide her a specified place in his store to display and sell her merchandise beginning September 1. Judy told Sam, on August 20, that she had changed her mind and would not move her stuff into his store nor pay him rent. What is this called?

anticipatory repudiation.

Isabel has an apartment that she no longer wants to live in, but she does not want to break her lease. Since the lease does not forbid it, Isabel transfers her entire right of possession to Sam for the remainder of the lease term. This is an example of

assignment.

What is a damage award given by the court to compensated the plaintiff for harm caused by the defendant's actions, usually a monetary amount for actual damages?

compensatory damages.

Joel wants to buy Maria's store, but he wants to include a statement in the purchase contract that he will only do so if it passes a property inspection. What is this type of statement added to the agreement called?

contingency.

Once a contract is terminated, it is considered

discharged.

Adam and Jenny enter into an agreement wherein Adam will buy Jenny's house at the asking price if Jenny will install a new roof and if Adam can qualify for a loan sufficient to cover the purchase. Until the roof is installed and the financing obtained, the contract is said to be

executory.

Zach is going to college. His parents sign a four-year lease for an apartment on campus. The first year, the rent is $450 per month. Each year, the rent will increase by $50 per month. What kind of lease is this?

graduated lease.

Johannsen signs a contract to sell his home to Smithson. At the closing, Joannsen gives Smithson a general warranty deed. In this situation, Johannsen is the

grantor. "or" is the giver. "ee" in the receiver.

Bonnie is renting a house from Clyde. She pays Clyde $1,100 each month and is responsible for paying all utilities at that house. Clyde is responsible for repairs and property taxes. Her lease is most likely a

gross lease.

Dr. Gitwell pays his landlord rent for his office and also pays all of the utility bills for the office. His landlord pays the property taxed, mortgage, and insurance. What type of lease is this?

gross lease.

Melissa went to the dry cleaners and dropped off her good wool coat to be cleaned. When the clerk accepted the coat, Melissa and dry cleaning operation had just entered into what type of contract?

implied. not put in words but terms of which are implied by the actions of the parties.

When there is mutual agreement of the offer and acceptance, this is called

meeting of minds.

Walton decides to sell his cabin on the lake and offers it in a letter to his regular postman, Bill, at a price of $5,000. The next day, Walton receives a note from a neighbor, a close friend of the postman, who says, "I accept your offer." Is Walton obligated to sell to the neighbor?

no, because only the offeree can accept an offer.

Peter leases space for his ice cream shop in Stella's building. He pays her $800 a month in rent plus a portion of his profits. It's been a cold summer and no one wants ice cream. When Peter's gross sales fall below a specified point, Stella reclaims possession of the space. Peter most likely has what kind of lease?

percentage lease.

There are four court enforceable remedies for breach of contract; compensatory damages, liquidated damages, specific performance and

rescission.

What is the term for when an offer is terminated or withdrawn before the offeree accepts it?

revocation.

Sarah and Beth have signed a purchase agreement. There is a time is of the essence clause in the contract stating that the transaction must close by April 5th Sarah is moving. Beth is having trouble getting the mortgage company to secure the loan by that date. If they don't close by April 5, the contract is

void.

Carrie, age 17, is selling the house that she inherited from her grandparents. George has agreed to buy the property, and both have signed a purchase agreement. What is the status of this contract?

voidable by Carrie. because she is not of legal age she can back out of the deal.

A lease executed by a minor lessor is

voidable by the landlord only.

A subdivision developer employs agent Sue to sell lots. John offers to buy lot B-3 for $20,000, and the sales contract is executed. However, through a typographical error, which no one noticed, the contract identified the lot as D-3 (which was listed at $25,000.) What is the contract status?

voidable. the mistake was mutual, material, unintentional and free of negligence.